WASHINGTON (JTA)-The collapse of the Israeli-Palestinian peace process a year ago has led to an accelerating war of words over Israeli settlements, with Israel accusing its growing chorus of foreign critics of prejudging the final terms of a peace deal at best-and anti-Semitism at worst.

The battle heated up this week with the release of a report by Human Rights Watch arguing that doing business with West Bank settlements reinforces Israel's presence there and contributes to human rights abuses.

The report comes a day after the European Union, which in November announced new guidelines to label Israeli exports produced in the settlements, declared that any agreement with Israel "must unequivocally and explicitly indicate their inapplicability to the territories occupied by Israel in 1967."

And the U.S. ambassador to Israel, Daniel Shapiro, while not going nearly as far, decried Israel's seizure of West Bank lands and what he described as a two-tiered justice system.

"Too many attacks on Palestinians lack a vigorous investigation or response by Israeli authorities; too much vigilantism goes unchecked; and at times there seem to be two standards of adherence to the rule of law: one for Israelis and another for Palestinians," Shapiro said in a speech Monday that otherwise extolled U.S.-Israel closeness.

Israeli Prime Minister Benjamin Netanyahu was infuriated by the remarks, calling them "unacceptable and incorrect." But his wider strategy against the settlement criticism has been to lump such efforts together with the wider Boycott, Divestment and Sanctions movement, or BDS, and liken them to the pre-Holocaust boycotts of Jewish businesses in Europe.

"Because bureaucracies or set patterns entrench themselves, and then we get the absurdity of the EU in Brussels, from European soil, labeling the products of Israeli citizens, of Jews," Netanyahu told foreign reporters last week. "And the last time that was done on the soil of Europe was over 70 years ago."

Israel has largely been able to stave off questions about the status of the West Bank as long as it seemed substantially engaged in the peace process. But developments this week seem to confirm warnings last year that the collapse of the peace process, followed by statements from Netanyahu on the eve of his reelection in March that appeared to reject the possibility of Palestinian statehood, would lead the United States and Europe to focus anew on the settlements, if only as a means of keeping open the option for a two-state solution.

The Human Rights Watch report argues plainly that trading with the settlements entrenches Israel in the West Bank and makes businesses a partner in the oppression of the Palestinians. It recommends that businesses "avoid financing, administering or otherwise supporting settlements or settlement-related activities and infrastructure, such as through contracting to purchase settlement-manufactured goods or agricultural produce, to ensure the businesses are not indirectly contributing to and benefiting from such activities."

The report cites an example of how bringing attention to Israeli practices in the West Bank can impede them. Human Rights Watch contacted a factory in a West Bank settlement that its researchers found provided linens for an American retailer and was underpaying its Palestinian laborers.

"During the conversations that followed, the factory agreed to close its operations in Barkan and locate to new facilities inside Israel," the group reported, without naming the parties.

"We are not looking for problems," Human Rights Watch quoted the factory's co-owner as telling the group. "It seems it really bothers people that we're there, so we'll leave."

Centrist and right-wing pro-Israel groups insist that such efforts to target settlements are aimed at setting the terms of a final peace deal. In December, the American Israel Public Affairs Committee posted a lengthy analysis of the European Union's decision on settlement labeling.

"The EU's action-taken outside the context of peace negotiations-is designed to impose Brussels' vision of Israel's future borders," said AIPAC, a prominent pro-Israel lobby. "These commercial attacks against Israel increase the prospect of isolating the Jewish state, while strengthening its most vitriolic critics and slowing the pursuit of peace."

The fight over settlements is also playing out in Congress and state houses. AIPAC has garnered bipartisan support through congressional statements rejecting attempts to single out settlements. And several state-level legislative moves to target BDS explicitly include attempts to distinguish the settlements.

Pro-Israel groups on the left argue that such efforts are mutually self-defeating. Attempts to isolate settlements are a good thing, they say, as they help neutralize the wider BDS movement.

"A more accurate labeling system, as Israel never annexed the West Bank, will allow European residents to make purchases according to ideological considerations," Americans for Peace Now said at the time of the European labeling decision. "This system will help curb efforts to boycott Israel entirely, such as those advocated by the BDS movement."